We use cookies to customise content for your subscription and for analytics.If you continue to browse Lexology, we will assume that you are happy to receive all our cookies. For further information please read our Cookie Policy.

By way of a March 24 2017 order, the Competition Commission of India (CCI) penalised the Association of Malayalam Movie Artists (AMMA) and the Film Employees Federation of Kerala (FEFKA) for boycotting a competitor in violation of Section 3(3)(b) of the Competition Act.(1)

Facts

The complaint was filed by Shri TG Vinayakumar, a writer and director in the Malayalam film industry and head of the Cinema Forum initiative, which enables collaborations between film makers and distributors for the purpose of making low-budget films with new actors. It alleged that the AMMA and FEFKA had barred various actors, technicians, producers and financers from working or associating with Vinayakumar or any of his projects. Further, it alleged that such conduct had affected fair competition in the market, consumer interest and freedom of trade carried on by others, by restricting the market in violation of Section 3(3) of the Competition Act.

Decision

Satisfied prima facie, the CCI referred the matter for investigation. The director general reported that, under the AMMA and FEFKA's directive, various actors had been removed from Malayalam films because they had appeared in the complainant's projects. In addition, producers who had given an advance to Vinayakumar to direct films were asked to cancel the projects at the insistence of the AMMA and FEFKA. The director general concluded that AMMA members had a tacit understanding not to work with Vinayakumar and exerted pressure on non-members to do the same. The director general opined that this tacit understanding among AMMA members was likely to limit or control the provision of services in the market, thereby violating Sections 3(1) and (3)(b) of the Competition Act. Similar conduct was also reported against the FEFKA, which had coerced actors and producers to disassociate themselves from the complainant's films or face boycott. The FEFKA's actions were therefore also found to violate Sections 3(1) and (3)(b) of the act.

Considering the director general's report, the CCI noted minutes recorded at a general body meeting of the AMMA and FEFKA which established that the associations had banned their members from working with Vinayakumar. It also noted a letter sent to Vinayakumar on April 3 2013 from a producer stating that he could not work with him unless the AMMA and FEFKA restrictions were removed. The CCI held that the AMMA and FEFKA had not only imposed a ban on the complainant, but had also influenced actors and technicians – through their respective associations – who worked or commenced work with him. Such influence led to numerous actors disassociating themselves from Vinayakumar. In addition, it found that the respective trade unions of the AMMA and FEFKA had been equally involved in the anti-competitive agreement between them.

The CCI concluded that the AMMA and FEFKA, as well as their trade unions, had violated Sections 3(1) and (3)(b) of the Competition Act. It directed them to cease and desist from their anti-competitive practices and imposed a penalty of 5% of the average income for the preceding three years on each party.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide.Register for a free subscription.